The situation between John Henry Newman and Orestes
Brownson described in the previous posting on this subject had not sprung from
out of nowhere. Nor were they the only
ones confronted with what looked like an attack on the very fabric of the
social order itself.
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| Charles Dickens |
In the wake of the French Revolution, the solid
underpinnings of European civilization seemed to have been swept away. Matters were not improved as the Industrial
Revolution spread and increasing numbers of people lost their livelihoods and
were forced either into the factories or the workhouse, the horrors of both
being familiar to readers of Charles Dickens.
A major part of the problem was that institutions were not
keeping pace with changes in society.
Neither was Christian doctrine developing, whether Catholic or
Protestant, or discipline being adapted and implemented. The social earthquake of the French
Revolution seemed to have stunned religious organizations and governments into
a near-catatonic state.
That, of course, could not last very long. Church and State as well as Nature abhor a
vacuum. People with new — or at least
radical — theories and proposals rushed in to fill the void. In response, reactionary “rear guard” champions
attempted to return matters to their pre-revolutionary condition, or at least
hold off what seemed to be an inevitable end as long as possible.
What no one seemed to be considering was a careful
restructuring of the institutions of the common good in conformity with the
precepts of the natural law. Changes
were being introduced willy-nilly with almost no thought of long-term effects
or even immediate consequences.
Efforts to force the social order to accommodate to the
changed conditions only revealed the inadequacy of both existing and new
institutions. Nowhere was this more
evident than in the economic arena, which quickly had a deleterious effect on
the political and religious world.
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| Adam Smith |
As a result, people tended to blame traditional
institutions of Church and State for their problems. Many people began calling for the destruction
of existing organized religions and governments and their replacement with new
types of institutions, while others agitated for a return to the status quo.
Of those who tried to hold the middle ground, even the
most astute seemed not to realize the effect of something as seemingly mundane
and removed from both politics and religion as improvements in productive
technology. Take, for example, the
analysis of Adam Smith in The Wealth of
Nations (1776).
It is common especially in Catholic circles these days to
excoriate Adam Smith (1723-1790) as the heartless philosopher-economist who
created the paradigm that justifies monopoly capitalism. His “invisible hand” argument is construed as
an effort to replace the God of Abraham, Isaac, and Jacob with an atheistic, amoral,
mechanistic, materialist “free market” that serves as a false idol for those
who have forsaken Christianity for rationalist liberalism on the elitist
English model.
Not exactly.
Smith’s personal religious convictions are irrelevant to this
discussion, but it is clear from his writings, especially The Theory of Moral Sentiments (1759) that he believed in God, and
it was likely some form of God as most Christians accept. What throws Christians off is the fact that
Smith attempted to do the same thing that both Aristotle and Aquinas did, at
least in part.
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| Pope Pius XII |
That is, Smith tried to base his philosophical arguments
on “the God of nature,” the absolute source of all creation discerned by reason,
and thus the basis of the natural law, which can therefore also be discerned by
reason. This is a concept with which the
Catholic Church emphatically agrees, and a century later in the First Vatican
Council would declare as an infallible doctrine. Pope Saint Pius X put it in the Oath Against
Modernism, and Pope Pius XII repeated it in the opening of his encyclical Humani Generis (1950).
Smith therefore tried very hard — and with a great deal of
success — to keep any personal religious beliefs he might have out of his
arguments. He was attempting to
demonstrate the universal nature and therefore the objective truth of the
“moral sentiments” (i.e., virtues) he
examined and prove them by reason, not persuade anyone of the truth of any
religious revelation or doctrine, however true he himself might believe it to
be.
That being said, Smith made a serious error, although one
many other people have made down to the present day and with much less excuse. When Smith wrote The Wealth of Nations, the Industrial Revolution was in its
infancy. It was in no way clear what the
effect of the new machinery would be. In
the last quarter of the eighteenth century it was simply unimaginable that technology
might permanently reduce or even eliminate the need for human labor.
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| The Division of Labor |
Smith, in fact, in The
Theory of Moral Sentiments had come close to ridiculing people who
preferred technology to human labor and carried this attitude over into The Wealth of Nations. At the same time, as in his example of the
pin factory, even though his point was the potential inherent in the division
of labor, he hinted at the incredible productiveness of technology over human
labor.
Somehow, however, Smith failed to put two and two together
and realize that machinery could easily replace human labor in the productive
process. He therefore assumed that human
labor had a permanent place in production.
Thus, Smith concluded that since no rich man could satisfy
even his most inordinate desires without employing the poor, the free market
would function to distribute the wealth of the world equitably if allowed to do
so. Regardless of the greed, rapacity,
or selfishness of the rich — even in spite of such anti-human tendencies —
their money would perforce be used to purchase the labor of the poor, or their
desires would necessarily remain unsatisfied.
In a free market, the rich would get what they wanted, and the poor
would get what they needed just as if an “invisible hand” had made an equitable
distribution of the goods of this world.
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| What happens when the rich satisfy their wants without the labor of the poor. |
That is all well and good . . . assuming that the rich
have no other way to satisfy their desires except
by employing the poor. Machinery,
however, allows the rich to satisfy their desires without employing the poor.
Advancing technology and concentrated ownership of that technology
amputate “the invisible hand” as it were, so that wealth is no longer distributed
equitably throughout society by the functioning of the system itself.
To make matters worse, technology does not simply replace
human labor one-for-one. Technology is
phenomenally more productive than even the most highly skilled craftsman. Technology can do a better job at much lower
cost per unit than a human worker, and the owner of the technology can charge
the customer a lower price and make much more money.
For example, assume that there is someone who employs ten
cobblers for five days a week. Each cobbler
makes five pairs of shoes each day, for which he receives one shilling (20¢)
per pair. This is a total of fifty pairs
of shoes per day on which the employer makes sixpence (10¢) profit per pair.
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| Expensive handmade shoes. . . . |
The employer is offered a machine costing £1,000 ($4,000)
that produces 1,000 pairs of shoes per day of equal or better quality than the
cobblers can make, and that has a useful life of twenty years. He can also hire one machine operator for one
shilling per day, reducing his compensation cost from £2 10 shillings to one
shilling, or by 98%. Assuming the
employer can find financing (a story for another day), will he replace his
human workers with a machine?
Unless the employer is running a charity operation, he
will purchase the machine, lay off ten skilled cobblers, and hire one unskilled
machine operator in their place.
This is because the human labor per pair of shoes costs
one shilling (20¢), while the machine “labor” plus the wages of the machine
operator per pair costs less than a quarter farthing (0.1¢), which is zero to all
intents and purposes. If the employer
keeps the same profit margin and increases sales by reducing the price per pair
by one shilling — the cost of human labor — he will net £25 ($100) per day
instead of £1 5 shillings ($5).
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| . . . or inexpensive machine made shoes of equal or better quality? |
Of course, the ten cobblers who lost their jobs no longer purchase
shoes or anything else with their wages, but with luck the former cobblers
might find work in another industry, even if for less money. That means, however, the owner of the new
machine must spend all of his disposable income on consumption to make up for
the loss of consumption power on the part of his former employees in order to
ensure that production and consumption remain in balance. That, however, is unlikely. He will probably reinvest his income in
excess of his consumption needs by buying more machines and make even more
income and then reinvest that, too, making the problem even worse.
Multiply that same scenario a few thousand times and you
can begin to understand what was going on before, during, and after the French
Revolution. Capital was producing a
virtual flood of goods and services for which there was insufficient domestic
demand. The only solution within the old
political paradigm was that new markets had to be found overseas to purchase
the increased production, or government had to print money to stimulate
consumption.
Not surprisingly, it was at this time that the British
Empire began its rapid expansion. As
Great Britain turned into an economic powerhouse and ordinary people lost production
power and thus consumption power, the Empire had to expand in order to open up new markets to absorb all the
goods and services being produced.
With a deteriorating tax base, the government began
backing new money with debt. This was an
expedient that had first been used on a large scale in the late seventeenth
century as soon as the invention of central banking made it possible to back
new money with government bills of credit.
It had then been used to finance the war against Napoléon in the late
eighteenth and early nineteenth centuries.
Of course, the government-induced inflation meant that
prices started going up, which put upward pressure on wages, making it more
profitable for manufacturers to replace more human labor with machinery. This only made the problem worse, as more and
more people were faced with inadequate or zero income at a time when inflation
was destroying the value of the currency and driving prices ever higher in real
terms.
The situation was ripe for the growth of something like
socialism to replace existing political and religious institutions — and that
is precisely what happened.
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